Benefits and Drawbacks of the Incorporation of a Panama Corporation in 2025

In the world of international business, Panama remains a prominent jurisdiction for company formation. Known for its territorial tax system, corporate transparency obligations, and global connectivity, incorporation of a Panama Corporation continues to attract entrepreneurs, investors, and multinationals alike. However, like any major decision, Panama company formation comes with both benefits and drawbacks. This blog explores the opportunities and challenges you must consider before establishing a Panama Corporation in 2025.

The Benefits of Panama Corporation Establishment

1. Favorable Tax Regime

Panama applies a territorial tax system—only Panama-source income is subject to corporate income tax; foreign-source income is not taxed in Panama. The standard corporate income tax rate on taxable Panama-source profits is 25%.Official references:

• Panama Income Tax Code – Article 694 (territoriality) (as amended): MEF/DGI – Law 6 of 2005 (PDF)

• Corporate income tax rate (25%): MEF eTax guidance

2. Strong Privacy Protections

Panama offers privacy for shareholders/ultimate owners, but it is important to be precise:

• Directors and dignitaries are filed at the Public Registry and are publicly searchable. This is required under Law 32 of 1927 (minimum three directors).

• Shareholders/UBOs are not listed publicly, but the resident agent must know the client under KYC rules, and law now requires UBO registration in a non-public government system accessible to competent authorities.

• Bearer shares are no longer anonymous in practice; they must be immobilized with an authorized custodian.

Official references:

• Minimum three directors & agent resident required (Law 32/1927): Panama Procuraduría de la Administración (official legal opinion quoting Art. 2): C-186-02 (PDF)

• Public Registry filing practice (directors, agent, etc.): Registro Público Manual de Calificación (PDF)

• UBO Register (Law 129 of 2020; access limited to authorities): UAF – Law 129 (PDF) and SSNF – RUBF FAQ (PDF)

• Bearer shares immobilization: Gaceta Oficial – Law 47 of 2013 (PDF) and Gaceta Oficial – Law 18 of 2015 (PDF)

3. Fast and Efficient Incorporation Process

The process is streamlined. A Panama corporation requires at least three directors and a resident agent (local attorney). Our typical timeline is 10–15 business days after we receive your complete documents, which aligns with our service page.Official references:

• Three directors & resident agent rule: C-186-02 (PDF)

• Annual government franchise (Tasa Única) – US$300: MEF/DGI – Tasa Única FAQ

Pricing & timeline (consistent with our service page):

• First year (formation + 1st year services): US$3,000

• Annual renewal from year 2: US$2,500

• Estimated incorporation time: 10–15 business days after all documents are received.

4. Asset Protection and Estate Planning

For clients seeking asset protection or estate planning, Panama’s Private Interest Foundation (PIF) can complement a corporation. The PIF is a statutory vehicle with asset segregation features under Law 25 of 1995.Official references:

• Law 25 of 1995 – Private Interest Foundations: Gaceta Oficial 22,804 (PDF)

The Drawbacks of Establishing a Panama Corporation

• Substance & compliance expectations: While foreign-source income is not taxed in Panama, many banking partners, processors, and counterparties expect basic economic substance and documentation of operations.

  
  

• Record-keeping & audits elsewhere: Panama requires accounting records to be maintained and kept for at least five (5) years), even for entities with foreign-source income only. Non-compliance can trigger sanctions.

  • Official reference: MEF/DGI – Law 52 of 2016 (Accounting Records) – Compendium (PDF)

    
    

• UBO registration obligations: The resident agent must register and keep updated UBO data in the RUBF (non-public) under Law 129 of 2020 and its regulations/resolutions.

  • Official references: UAF – Law 129 (PDF) • SSNF – RUBF FAQ (PDF)

    
    

• Reputation/AML context (improved): Panama was removed from the FATF “grey list” in Oct 2023, reflecting improvements to its AML/CFT framework—this has helped, but banks still apply rigorous due diligence.

  • Official reference: FATF – Panama strengthened its AML/CFT regime (Oct 2023)

Is Panama the Right Choice for Your Business in 2025?

A Panama corporation can deliver meaningful benefits—tax efficiency on non-Panama income, internationally recognizable governance, and a clear legal framework—provided you’re comfortable with transparency and compliance requirements (public directors, UBO registry, accounting records). If your operations are primarily outside Panama and you can meet banking/KYC standards, Panama remains a pragmatic, cost-effective option.

How Mirr Asia Can Help?

At Mirr Asia, we specialize in seamless Panama Corporation Establishment tailored to your business needs. Our experts offer end-to-end services — from name reservation and document preparation to registered agent services and corporate compliance support.

We ensure your corporation is incorporated swiftly and complies with Panama's evolving regulations. Whether expanding your global footprint, protecting assets, or launching new ventures, Mirr Asia makes establishing a Panama Corporation hassle-free and secure.